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Directors Report of JCT Ltd.

Mar 31, 2015

Dear Members

The Directors are pleased to present the 66th Annual Report on the affairs of the Company together with Audited Financial Statements for the financial year ended 31st March 2015. The Management Discussion and Analysis is also included in this Report.

1. Financial Highlights

(Rs. in lacs)

2014-15 2013-14 (12 Months) (6 Months)

Gross Income from operations 102,214 49,224

Other Income 777 482

Profit before Interest, Depreciation, 7,103 3,664 tax and Exceptional Items

Interest and financing charges 3,366 1,706

Depreciation and amortization Expense 2,758 1,656

Exceptional Items

- Profit/ (Loss) of Discontinuing (102) (51) Operations

Provision for Tax

- Current Year - -

- Earlier Year - (83)

Net Profit 878 334

2. Transfer to Reserves & Dividend

No amount is appropriated from Profit and Loss Account and transferred to any Reserve Account. In view of accumulated losses, the directors are unable to recommend any dividend.

3. Outlook of the Economy

As per the latest GDP growth estimates, Indian economy grew by 7.4% in FY 15 compared to 6.9% in FY 14, mostly driven by improved economic fundamentals and revision of GDP methodology calculations. Even inflation showed signs of moderation, a welcome sign - wholesale price and customer price inflation declined to 4.2% and 7.4% respectively, compared to last year's 6.3% and 10.1%. Reduced inflation, falling crude oil prices, stable Rupee, improved purchasing power and consumer spending, higher capital inflows supported by the government policy reforms have already put India on an accelerating growth track and improved business outlook.

The Indian Textile Industry counts among the leading textile industries in the world; its role in the country's economic growth is significant. It accounts for 14% of India's total industrial production and 4% of India's GDP. After witnessing challenges during FY 13 and most part of FY 14 given unfavorable economic conditions, the Indian textile and garment sector has seen reversal of trends in second half of FY 14. With domestic and global economic conditions improving gradually alongwith the focus made by Ministry of Textiles, Indian textile and garment sector is set for growth. It has the potential to double itself in size over the next 6-7 years. Among the major competing nationals,

China is losing its competitive advantage in textiles mainly on account of increasing labour costs, appreciating Yuan, rising power costs, focus on domestic market and also due to conscious strategy to move higher value addition industries. Other major exporting countries like Pakistan and Bangladesh are facing geo-political issues. In this scenario all major export markets like USA, Europe and Australia are increasingly looking to shift a large portion of their sourcing pie. India is well placed to fill this gap since its entire major costs like cotton, yarn, power, wages, dyes and chemicals are today globally competitive. In addition, the government also has been supportive for the industry and in order to unlock the complete potential of India, more efforts are needed from the industry as well the government.

'Make in India' campaign covering 25 sectors, including the textile and garment industry has put in place the logistics and systems to address in a timely manner queries of potential investors. At present, the Government of India (GOI) allows 100% foreign direct investment under the automatic route in the textile sector, subject to all applicable regulations and laws, which effectively backs the make in India program for the textile and garment industry.

The Cabinet Committee on Economic Affairs late in August 2014 gave its approval for continuing the Textile Up- gradation Fund Scheme (TUFS) during the 12 plan period with major focus on power looms in accordance with the Budget announcement for the financial year 2013-14.

4. Business Strategy

The last two years were very challenging for the Textile Industry as a whole due to less demand from the West, this played havoc with the capacity utilization. The low demand put pressure on the prices, which headed southwards. The input costs also remained very high like power & fuel, labour cost and transportation cost due to hike in fuel cost. During the last few months, there have been medium surge in demand from the export with very less support from domestic front. In order to gain advantage of this changed situation the team in JCT has worked on format wherein they have tried to reduce WIP by better coordination and faster money inflow with the available resources on which the company has been working till date. This complete revamping of thought has led to gaining of confidence of the customer and the supplier. Market is expected to improve in the near future as demand expected to surge owing to change in market situations in overseas and domestic business owing to seasonal demands. The emphasis of the management is to run the plants at optimum level and remove bottlenecks in Operations.

The Company entered into a new segment of Home Furnishing last year with the brand JCT Homes. The market response has been quite good and the company expects a substantial volume for the full year during the financial year 2015-16. It is a capital intensive segment. The company has also entered into a new product line of Technical Textiles and the response from the customers has been encouraging. It requires specific fibers which is not available in India and needs to be imported. The margins in both, Home Furnishing and Technical Textiles have been quite good.

In Nylon Filament Unit, technology up-gradation would be main thrust going forward to remain competitive in the market, the unit is to upgrade itself in coming years. Since market is growing at considerable pace, other manufacturers are in expansion mode by installing Fully Drawn Yarn (FDY) machines. In order to compete with FDY product, unit is exploring lower capital cost possibility to substitute LOY (Low Oriented Yarn). The unit is exploring possibility of making Nylon Fibre, which is being used as replacement of natural fibre like wool.

5. OPERATIONS

Textiles:

The performance of textile unit during the year under review has been very encouraging and turnover crossed all time high of Rs 600 Crores. The unit, besides producing yarn for in-house requirement, produced for market also sold around 250 MT / month. With minor debottlenecking, the unit has now been producing technical yarn on conventional machines. The unit upgraded Continuous Dyeing Range - I, and revamp 50 TPH Boiler with minor investments to improve upon the working of processing department and boiler efficiency.

There have been substantial initiatives in Synthetic Fabric (Taffeta) Unit like introduction of Dope Dyed Fabrics, outsourcing grey fabrics to optimize the processing capacity and R&D to use indigenous coating chemicals without compromising on quality.

Nylon Filament Yarn:

The Filament unit has emerged as top Textile Grade Nylon Yarn manufacturer in India despite higher & cheaper imports are coming to India through ASEAN Countries. The unit managed to sell 13601 MT of filament yarn and 199 MT of nylon chips. The raw material, Caprolactum, being petroleum product remained in the range of Rs 145/- per kg to Rs 157/- per kg before falling to Rs 112/- /per kg at the fag end of FY 15. The realization, too, remained more or less stable throughout the year in the range of Rs 260/ - to Rs 270/- per kg.

6. FINANCE

The Company has been meeting its repayment obligation as per the terms of restructuring under CDR mechanism. The scheme has been implemented fully except of the filing of charge under CDR Scheme which could not be filed due to the Order of the Hon'ble High Court of Punjab at Chandigarh. However, all the immoveable and moveable assets including current and book debts are charged with the secured lenders in earlier years. The company is grateful to lenders for their continued support.

7. SHARE CAPITAL

During the year under review, the Company has not issued shares with differential voting rights. The Paid-up Capital as on March 31, 2015 was Rs. 16319.82 Lakhs divided into 55,67,92,649 Equity Shares of Rs. 2.50 each, 10,00,000 Optionally Partially Convertible Preference Shares of Rs. 100 each and 14,00,000 Optionally Convertible Preference Shares of Rs. 100 each.

8. FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)

The company could not redeem the outstanding FCCBs of US$ 12.49 million alongwith redemption premium. The Trustee of the FCCB holders filed a winding up petition with Punjab & Haryana High Court at Chandigarh on 29th September 2012. The Winding up petition was disposed of by the Hon'ble High Court on 27th January 2015. The Hon'ble Court directed the Company to pay 25% of dues within 6 months and balance thereafter unless rescheduled. Further, the Company has been restrained to create further Charge. The Appeals have been filed against the Order with the Senior Bench of Punjab & Haryana High Court at Chandigarh by the Trustee and the Company on various grounds which are pending disposal. Notwithstanding the aforesaid appeals, the Company continues to negotiate / discuss with the FCCB holders for the settlement of dues. The Company is hopeful of an amicable resolution of the dispute through negotiation.

9. DEPOSITS

During the year Company accepted fixed deposits of Rs.149.43 lakhs which were covered under Chapter V of the Companies Act 2013. Deposits of Rs.380.54 lakhs including unclaimed of Rs 10.08 lakhs accepted prior to 1.4.2014 will be paid as and when due and claimed. Out of unclaimed fixed deposits amounting to Rs.6.31 lakhs were paid subsequently. The Company is regular in repayment and servicing of interest on fixed deposits.

10. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

11. CORPORATE GOVERNANCE

As per Clause 49 of the Listing Agreement with the Stock Exchange, a separate report on Corporate Governance practice followed by the Company, together with a certificate from the Company's Auditors confirming compliance forms an integral part of this Report.

Pursuant to Section 177(8) of the Companies Act, 2013, the composition of the Audit Committee is given in the Corporate Governance Report.

12. AUDITORS

Statutory Auditors

M/s S.P. Chopra & Company (Firm Registration No.000346N), Chartered Accountants, were appointed as Statutory Auditors of your Company at the last Annual General Meeting held on 25.09.2014 for a term of three consecutive years. As per the provisions of Section 139 of the Companies Act, 2013, the appointment of Auditors is required to be ratified by the Members at every Annual General Meeting.

The Report given by the Auditors on the financial statements of the Company is self explanatory and is a part of the Annual Report. However, in respect of certain observations made by the auditors in their Report to the members of the Company, directors have to submit that (a) the redemption of FCCBs was due on 8th April 2011, for US$ 25.42 million alongwith redemption premium. The dues for FCCBs of US$ 12.93 million were settled by conversion into equity shares. The holders of balance outstanding of FCCBs of US$ 12.49 million filed a winding up petition in Punjab & Haryana High Court on 29.09.2012. The winding up petition has been disposed of by the Hon'ble Court and directed the Company to pay 25% of the dues within 6 months and balance thereafter unless rescheduled and company is restrained from creating further charge. The appeals have been filed by both parties on various grounds which are pending disposal. Notwithstanding the aforesaid appeal, the company continues to negotiate / discuss with the bondholders for the settlement of dues. Non-provision of Rs 2258.73 lakhs towards yield protection is considered necessary as the matter is sub-judice and under negotiation / discussions with bondholders; (b) delay in deposit of statutory dues were for very short period due to non-availability of funds timely; (c) delay in respect of cheques by the depositors led to delay in clearance of cheques; (d) The financial statements have been prepared on going concern basis although accumulated losses have eroded substantial net worth, on the strength of continued support from the promoters, bankers / other lenders and likely gain from sale of proposed non-core assets which will reduce the debt of the company substantially; and (e) Uncertainty related to outcome of the appeal filed with Courts of Appeals at Malaya for a claim of Rs 788.25 lakhs by ex-employees of CNLT, Malaysia; The Company made an advance payment of US$ 890,000 for purchase of yarn to CNLT, Malaysia now under liquidation in December 2006. CNLT could not supply materials in time and JCT suffered a loss and demanded compensation from them. CNLT, Malaysia refunded US$ 1,250,000 in June 2007 as refund of advance alongwith compensation. On the petition filed by the ex-employees of CNLT, the Hon'ble Court at Malaya directed company to return the entire amount. JCT appealed against the order with Courts of Appeals in Malaya which is pending disposal. The company is legally advised that provision of said contingency is not necessary as the appeal against the said order will most likely be allowed.

Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules 2014, the cost audit records maintained by the Company in respect of its textile and filament yarn units are required to be audited.

The Board of Directors, on the recommendation of the Audit Committee, has appointed M/s Goyal, Goyal & Associates, Cost Accountants, as Cost Auditor of the Company for the financial year 2015-16 at a remuneration of Rs. 1,25,000/- plus service tax as applicable and reimbursement of out of pocket expenses. As required under the Companies Act, 2013, the remuneration payable to Cost Auditor is required to be placed before the members for ratification. Accordingly, a resolution seeking members' approval for the remuneration payable to the Cost Auditor forms part of the Notice convening the Annual General Meeting.

The cost audit report for the financial year 2013-14 was filed with the Ministry of Corporate Affairs on 26th September, 2014.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the company has appointed Ms. Seema Sharma, Whole Time Company Secretary in Practice (C.P No.4397) to undertake the Secretarial Audit of the Company. The Secretarial Audit report is annexed herewith as Annexure 'A' and forms an integral part of this Report.

There is no secretarial audit qualification for the year under review.

13. EXTRACT OF THE ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT - 9, as required under Section 92 of the Companies Act, 2013, is included in this Report as Annexure 'B'

14. STATUTORY DISCLOSURES

Conservation of Energy, Technology Absorption & Foreign Exchange Earnings & Outgo

The particulars relating to energy conservation, technology absorption and foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Companies Act, 2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is given in Annexure 'C' to this report.

Particulars of Employees

The information required under section 197(12) of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Director's Report for the year ended 31.03.2015 is given in a separate annexure to this report. The above annexure is not being sent along with this report to the members in line with the provisions of section 136 of the Act. Members who are interested in obtaining these particulars may write to the Company Secretary at the Registered Office of the Company. The aforesaid Annexure is also available for inspection by the Members at the Registered Office of the Company, 21 days before the 66th Annual General Meeting and upto the date of ensuing Annual General Meeting during the business hours on working days.

None of the Employees listed in the said annexure is a relative of any Director of the Company. None of the employees hold (by himself or alongwith his spouse and dependent children) more than 2% of the equity shares of the Company.

15. DIRECTORS

Changes in Directors and Key Managerial Personnel

During the year under review, there was no change in the Board of Directors and Key Managerial Personnel.

Ms. Priya Thapar will retire at the forthcoming Annual General Meeting of the Company and being eligible, offer herself for re-appointment.

Declaration by Independent Directors and re- appointment, if any

All independent directors have given declarations that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Formal Annual Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its constituted Committees from time to time. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Remuneration Policy

The Board of Directors has framed a policy which lays down a framework in relation to criteria for selection, appointment, remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. The policy is stated in the Corporate Governance Report.

Number of Meetings of Board and its Committees

The details of the number of meetings of the Board held during the financial year 2014-15 forms part of the Corporate Governance Report.

16. WHISTLE BLOWER POLICY:

The Company has a Vigil Mechanism named Whistle Blower Policy to deal with the instances of fraud and mismanagement, if any. The details of Whistle Blower Policy is explained in the Corporate Governance Report and also posted on the website of the Company.

17. RELATED PARTY TRANSACTIONS

All transactions entered with Related Parties were on arm's length basis and in the ordinary course of business. There were no material significant related party transactions made by the Company during the year under review with the Promoter/Directors or Key Managerial Personnel. All related party transactions are placed before the Audit Committee as also to the Board for approval and omnibus approval was obtained on a quarterly basis for transactions which are of repetitive natures. The policy on related party transactions as approved by the Board has been uploaded on the website of the Company. None of the Directors has any pecuniary relationship or transactions vis-a-vis the company. During the year ended 31.03.2015, there was no transaction under Section 188 of the Companies Act, 2013, therefore , form AOC-2 is not applicable to the Company.

18. RISK MANAGEMENT

Pursuant to Section 134 (3) (n) of the Companies Act, 2013 & Clause 49 of the Listing Agreement, the company has constituted a Risk Management Committee. The details of the committee and its terms of reference are set out in the Corporate Governance Report forming part of the Board Report. It may be noted that at present none of the identified risks is such which may threaten the existence of the company.

19. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE

There are no significant and material orders passed by the Regulators / Courts that would impact the going concern status of the Company and its future operations. However, pursuant to a petition filed by the ex-employee of CNLT, Malaysia (under liquidation), the Hon'ble Court of Malaysia at Kuala Lumpur in its Order dated 13.06.2014 directed the Company to return US$ 12,50,000. The Company has filed an appeal against the said Orders with the Courts of Appeals at Malaysia, which is pending disposal.

20. INTERNAL CONTROL SYSTEMS

Company has a well established and effective internal control and risk-mitigation system in all areas of its operations, including suitable monitoring procedures and competent and qualified personnel. In addition to statutory audit, financial controls are reviewed by independent agency of internal auditors, who report their findings to the Audit Committee of the Board. The Audit Committee of the Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective actions taken. The Company conducts its business with integrity and high standard of ethical behavior and in compliance with the laws and regulations.

21. CORPORATE SOCIAL RESPONSIBILITY

As a part of its initiative under the "Corporate Social Responsibility" (CSR) drive, the Company has set up Corporate Social Responsibility Committee (CSR Committee) as per the requirement of the Companies Act 2013. The CSR policy was approved by the Board of Directors and has been uploaded on the Company's website i.e. www.jct.co.in. The list of Programs and other imperative information of CSR is mentioned in the said policy.

The members of the CSR Committee are Mr Samir Thapar - Chairman & Managing Director, Ms Priya Thapar - Director HR and Mr Gordhan Bhojraj Kathuria - Independent Director. Due to the accumulated losses the average net profit of last 3 years is coming as negative, hence the contribution under CSR, is not applicable for this financial year.

However, the Company's Units at Phagwara and Hoshiarpur have residential colonies for workers and staff. The Company's unit at Phagwara is running a co-education school which provides free education to the children of the workers right upto the class 12th standard and similar school is being run in Hoshiarpur upto 8th standard.

22. CONSERVATION OF RESOURCES

Company's working is as per applicable statutory provisions pertaining to health and safety and Company also takes all possible measures to prevent accidents and occupational hazards. The manufacturing operations are conducted to ensure sensitivity towards the environment and minimize waste by encouraging "Green Initiative" practices. Efficient management and use of renewable resources are encouraged. All employees are obliged to ensure that they fully understand all policies and they fully comply with the requirements.

23. DISCLOSUIRE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has zero tolerance for sexual harassment at work place and has adopted a policy against sexual harassment in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder. The Company has not received any complaints on sexual harassment and hence no complaints remain pending as of 31st March, 2015.

24. DIRECTORS' RESPONSIBILITY STATEMENT

In terms of Section 134(3) (c) of the Companies Act, 2013, your Directors make the following statement that :

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis;

(e) the directors, had laid down internal financial controls which were followed by the company, such internal financial controls are adequate and operating effectively; and

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.

25. STATEMENT OF CAUTION

Statements in this Directors' Report & Management Discussion and Analysis Report describing the Company's objectives, projections, estimates, expectations of predictions may be forward looking within the meaning of applicable laws and regulations. Actual results could, however, differ materially from those expressed or implied. Important factors that could make difference to the Company's operations include raw material availability and its prices, cyclical demand and pricing in the Company's principle markets, changes in Government regulations, tax regimes, economic developments within India and globally.

26. APPRECIATION & ACKNOWLEDGEMENTS

Your Directors wish to place on record their deep appreciation for the contribution made by the workers and employees at all levels but for whose hard work and support, your Company's achievements would not have been possible. Your Directors also wish to extend their appreciation for the assistance and co-operations received from the bankers, investors, customers, dealers, agents, suppliers for their continued support and faith reposed in the Company.

For and on behalf of the Board

Place : New Delhi SAMIR THAPAR Date : 19.05.2015 Chairman & Managing Director

DIN : 00062287


Sep 30, 2013

To the Members of JCT Limited

The Directors of your Company present the 64th Annual Report on the affairs of the Company together with audited statement of account of the Company for the 18 months period ended on 30th September, 2013.

The highlights of financial Results for the year are given below:

(RS.in lacs)

2012-13 2011-12 (18 Months) (12 Months)

Gross Income from operations 1,32,643 82,797

Other Income 1,823 728

Profit before Interest, Depreciation, tax and Exceptional Items 6,284 2,223

Interest and financing charges 5,295 4,116

Depreciation and amortization Expense 7,392 4,695 Exceptional Items

- Profit/(Loss) from Discontinuing

Operations (674) (143)

- Secured Lenders'' Sacrifice (1,622)

-Provision for Tax

- Current Period

- Earlier Year 82 14

Net Profit/(Loss) (8,780) (6,805)



Dividend

In view of losses, the Directors are unable to recommend any dividend.

Operations

The global economy has been passing through a prolonged phase of uncertainty and the low growth along with the atmosphere of hesitancy is also reflected in India. The recovery from the global crisis of 2008-09 in the advanced economies has been uneven and fragile and this as well as a number of its own problems has had a notable dampening effect on growth and business confidence in India over the last two to three years. Continuing high inflation, unacceptable level of fiscal and current account deficits, lackluster performance on the export front as a fall in the rate of growth in industrial production, high prices of crude in international markets- all these have added to the reasons for low economic growth. Further, a consequential tight monetary policy during the major part of the period coupled with stalled reforms, electricity shortages and lack of rain in some parts of the country have all contributed to lower business confidence. These factors have adversely impacted government spending and investment by private sector for various project related to infrastructure development, housing and industry. As the government has over the last few months taken some action to revive industrial growth, encourage fresh investment and seems committed to reforms in terms of keenly awaited measures being promised for implementation, our economy in the coming years should regain a trajectory of high growth, nearer to that witnessed in the recent past.

The Indian Textile Industry is one of the leading Textile Industries of the world. Though the Industry was predominantly, unorganized industry even a few years back, but the scenario started changing after the economic liberization of Indian economy in 1991. The opening of the economy gave the much needed thrust to the Industry and now it has successfully become one of the largest industries in the world.

The textile Industry plays a pivotal role in the economic life in the country. Apart from providing one of the basic necessities of life, the industry also plays a vital role through its contribution of about 14% to Industrial Production, 4% to Gross Domestic Product (GDP), and 11% to the country''s export earnings as per Government of India, Ministry of Textiles, Note on Textile and Clothing Export of India. It provides direct employment to over 45 million people and thus the Textile Industry is the second largest provider of employment after agriculture. Accordingly the growth and development of the industry has a direct bearing on the economy of the nation and its people.

Textile Unit

The textile division operated at an average of around 75% and produced 5.53 crores meters of fabrics during the 18 months period ended on 30th September 2013.The utilisation of capacities at Textile Units at Phagwara suffered very adversely due to shortage of working capital funds. The performance also affected besides lower capacity utilisation adverse fluctuation in foreign currency, cost of power & fuel increased substantially since power rates increased by PSEB and also rice husk. The increase in inputs the selling prices increased marginally during the period, thus leading to strain on the overall margins. However, the performance during the quarter ended 30th September 2013 improved substantially in terms of turnover and the margins.

- The company is having 19.5 MW in house rice-husk based power plants. The rates of rice husk have been on the rise this year.

- The company incurred operational cash losses during the financial year 2008-09 to 2012-13 and continued to service interest and repayment of debts to the lenders in terms of various loan agreements entered into with lenders despite losses which resulted in further erosion of working capital and lower capacity utilization.

In Sriganganagar unit, the operations were discontinued in earlier years. The agreement to sell entered into with the buyers of land at Sriganganagar was terminated during the year due to non-fulfillment of conditions of the agreement by the buyer for quite a long time.

Industry Scenario

The Indian textile industry is on a comeback trail due to an improved US economy, a recovering demand from the European Union and favourable raw material prices. China, a major textile producer for about two decades is now focusing on other sectors, which should open up opportunities for other textile producing countries such as India and Bangladesh. As a result, India, Bangladesh and Vietnam are receiving more orders due to reduction in the global spinning capacity and cut down in cotton imports by China. The global buyers, therefore, are looking at India as one of the major sourcing destinations. The Indian textile industry is competitively placed vis-à-vis competitors. India offers higher skills, lower cost, modern technology, global acceptance and a highly creative pool of design talent. A supportive policy regime and the absolute commitment of private enterprise add strength to Indian prospects. India is among the few textile manufacturing countries, which is fully integrated from fibre to finished products.

Financial problems:

In light of the scenario, as explained above, owing to marketing difficulties, lower capacity utilisation the profitability of the Textile operations remained in the negative zone. Consequently in this situation the earnings which had gone negative on account of low capacity utilization, the company ended up paying interest to the Banks out of working capital. This situation led to further erosion in already strained working capital.

Now that the fabric demand has picked up, most Textile Companies of the country are running their Plants at full capacity. Inspite of the order-book being comfortable, full capacity utilization your Company continues to be elusive on account of working capital constraints.

Steps initiated by the company:

- The company has since expanded its customer base and has gone deeper with the existing customers to fully secure its production capacities. The company in these years, focused, especially on work-wear and sportswear segments.

- The marketing strategy of your company has been changing with the time and there has been a shift in product mix accordingly.

- The company has been very guarded in covering cotton in the current season. The management is ensuring to run the plants at maximum possible levels.

- The company has taken several power saving initiatives, which will cover a part of husk price hike.

Filament Unit

JCT continues to maintain its position as one of the largest Textile Grade Nylon yarn manufacturer in India with installed capacity of 14,000 TPA. During the period the unit produced 18170 MT of filament yarn with average denier of 35.2.

The continuous upward trend in prices of Caprolactum has been a major concern for the company. The Caprolactum prices increased from average of Rs 139.67 per kg in 2011-12 to Rs 146.16 per kg during the period with an increase 4.65% The capacity of the market to absorb prices is limited as weavers start moving to other type of yarns.

The company has made a major shift in the product mix where the dependability on yarn sold in Surat market has been shifted to yarn being sold in Amritsar and Mau markets. The change is very significant as LOY base 20 Mono Yarn is less prone to market fluctuation and has a much higher margin.

The unit to keep the profitability in place has started selling Steam to other parties on profit sharing basis, which has resulted good profits to the unit.

Industry Scenario

In last 18 months, Overall Nylon Textile filament market size has increased from 5200 MT to 6300 MT mainly in FDY Multi-Filament segment with major share of growth in Surat region. In total product mix, share of Mono-Filament has come down from 2000 MT to 900 MT while FDY Multi-Filament has increased from 3100 MT to 4500 MT. Partly this increase in FDY segment has been met by Imports and balance approx 40% increase by New Spinners. As on date, further 500 MT /Month of capacity is in pipe line and will be commissioned in next six months.

The company expects that market will keep on expanding in Nylon Filament Yarn in immediate future @ 10% PA and mainly in FDY Multi-Filament Yarn. As far as competition is concerned, major threat remains from imports mainly from Vietnam & Taiwan having cost advantages.

Finance

During the period, the company has successfully implemented restructuring scheme with the lending banks under Corporate Debt Restructuring (CDR) mechanism. The company is regular in repayment of interest and installments to the banks in line with the scheme approved by the CDR Cell on 21st September 2012. The additional working capital which was part of the scheme could not be availed due to the order of the Hon''ble High Court of Punjab at Chandigarh restraining company to create charge over its assets.

The company has issued and allotted 40880000 Equity Shares of Rs 2.50 each to M/s Provestment Securities Pvt Ltd., a promoter company and also 40880000 Equity Shares of Rs 2.50 each to lending banks towards part settlement of their sacrifice on NPV basis as per stipulations of the CDR Scheme.

M/s Provestment Securities Pvt. Ltd., a promoter company, also infused Rs 5.78 crores as Subordinate Debt as per the condition of CDR Scheme.

Foreign Currency Convertible Bonds (FCCBs)

The Company could not redeem the Foreign Currency Convertible Bonds (FCCBs) on due date 08.04.2011 for paucity of cash funds. In the meantime, the Bank of New York, trustees of the FCCBs filed a winding up petition in the Punjab & Haryana High Court on 29th September 2012, which is pending for disposal. The majority of bondholders around 51% of the value of bonds have objected to the winding up in the Court and also agreed to convert their bonds of US$ 12.93 million into 11,59,54,059 equity shares of Rs 2.50 each in settlement of their dues.

The trustees are now representing the minority of the bondholders who are not in agreement with the proposal submitted by the company.

During the last hearing on 14th November, 2013, the Hon''ble High Court fixed next date of hearing on 9th and 10th January 2014 on the issue of maintainability of the winding up petition. The company has been advised that the merit of the case do not warrant winding up.

Net Worth Erosion

The accumulated losses of the company at the end of 18 months period ended on 30th September 2013 have resulted in erosion of its net worth. The company will take necessary steps to comply with the requirements of the Sick Industrial Companies (Special Provision) Act, 1985. Shareholders are requested to take note of this erosion and consider the same at the Annual General Meeting of the members being convened on 30th December 2013. It must also be noted that consequent to the settlement with Foreign Currency Convertible Bond Holders having around 51% value of the bonds i.e. US$ 12.93 millions, upon receipt of regulatory approvals which are under process, the net worth of the company will improve by around Rs. 93 crores and no further compliance with the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 will be required. The Board of Directors of the company therefore perceive that the negative net worth position is purely temporary till the conversion of a portion of the Foreign Currency Convertible Bonds into equity shares and reserves created out of such conversion.

That in case the bonds are not converted into equity for whatever reason then management is conscious that applicable reference will be filed within the statutory period.

Fixed Deposits (FDs)

Deposits remaining unclaimed at maturity amounted to Rs. 102.32 lakhs as on 30th September 2013. Of the above, deposits of Rs. 20.42 lakhs have been repaid subsequently. The company is regular in repayments and servicing of interest on fixed deposits.

In view of substantial erosion in net worth in earlier year the company had stopped accepting fresh and renewals of deposits.

Statutory Disclosures

The particulars of employees as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 are given in a separate Annexure to this Report. The Annexure is not being sent alongwith this Report to the Members of the Company in line with the provisions of Section 219(1)(b)(iv) of the said Act. These documents will be made available on request by any member of the Company.

The statement containing the information relating to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules 1988 are annexed hereto and forms an integral part of the report.

Pursuant to Clause 49 of the Listing Agreement, report on Corporate Governance and Management Discussions and Analysis is annexed hereto and forms an integral part of this report.

Directors'' Responsibility Statement

As required under Section 217 (2AA) of the Companies Act, 1956 this is to confirm that:

i) in the preparation of the annual accounts, the applicable accounting standards have been followed alongwith proper explanations relating to material departures, if any;

ii) such accounting policies have been selected and applied consistently and judgments/estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

iii) proper and sufficient care have been taken with best of knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the said Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the annual accounts have been prepared on a going concern basis.

Auditors

M/s S.P. Chopra & Company, Chartered Accountants, Auditors of the Company, retire and being eligible offer for re-appointment. The Audit Committee and the Board of Directors recommend the re-appointment of M/s S.P. Chopra & Company as the Auditors of the Company.

Auditors'' Report

The report by the auditors is self-explanatory. However, in respect of certain observations made by the Auditors in the Annexure to their main Report to the members of the Company, directors have to submit that (a) non-clearance / payment of cheques issued to fixed deposit holders, the same have been issued to them timely and are under clearance in the banks; (b) delay in deposit of statutory dues were for very short period due to non-availability of funds timely; (c) the redemption of FCCBs was due on 8th April 2011, for US$ 25.42 million alongwith redemption premium of US$ 5.08 million, the company could not make payment due to paucity of funds and approached bondholders for restructuring. Bondholders for value of US$ 12.93 million (51% of outstanding) have agreed for converting their bonds into equity. The company is in the process of obtaining statutory approvals for conversion of bonds into equity shares. In the meantime winding up petition filed by the trustees before Hon''ble High Court of Punjab & Haryana at Chandigarh, which is pending hearing / disposal. In the light of merit of the petition, the company does not anticipate any adverse outcome of the said litigation.

Cost Auditors

Pursuant to provisions of Section 233-B of the Companies Act, 1956, your Directors have appointed Mr. P.K. Verma AICWA, ACMM, as the Cost Auditors to conduct the Cost Audit of Textile Units at Phagwara and Sriganganagar and Filament Unit at Hoshiarpur, for the year ending on 30th September, 2013 and the requisite approval of Central Government have been received.

They were also appointed to submit the Cost Compliance report for the Financial Year ended 31st March, 2012 which has been filed with the Ministry of Company Affairs.

Directors

In accordance with the provisions of the Companies act, 1956 and Articles of Association of the Company, Mr Gordhan Bhojraj Kathuria, retire by rotation and being eligible offer himself for re-election.

Mr. Chander Mohan Bhanot has joined the Board as Additional Director w.e.f 24th January, 2013, and holds office as Additional Director upto the date of the forthcoming Annual General Meeting of the Company. The Company has received notices from the members of the Company under Section 257 of the Companies Act, 1956 proposing his candidature for the office of Director.

During the period under review Allahabad Bank, the Monitoring Institution under Corporate Debt Restructuring Scheme, vide its letter dated 14.08.2013 had nominated Mr. Parthdeb Datta as Nominee Director in place of Mr. Vipul Singla.

Ms. Priya Thapar has joined the Board as Additional Director w.e.f 26th November, 2013 and holds office as Additional Director upto the date of the forthcoming Annual General Meeting of the Company. The Company has received notices from the members of the Company under Section 257 of the Companies Act, 1956 proposing her candidature for the office of Director. Board of Directors in their Meeting held on 29.11.2013 has approved her appointment, subject to approval of Shareholders in Annual General Meeting, as Whole Time Director-Human Resource (HR).

Mr Apar Singh Dugal expired on 19.05.2013 and ceased to be the Director of the Company. Directors have placed their condolence on this sad demise and appreciate for his contribution, assistance and guidance during his tenure as Director of the Company.

Acknowledgement

Your Directors wish to place on record their appreciation for the team spirit, dedication, and commitment shown by the work force of the Company during this period. Their unstinted support has been and continues to be integral to your Company''s operations.

Your Directors acknowledges the valuable support of banks, customers, suppliers, business associates, shareholders for their continued co-operation and look forward to their continued support.

For and on behalf of the Board

New Delhi SAMIR THAPAR

Date: 29th November, 2013 Chairman & Managing Director


Mar 31, 2012

To the Members of JCT Limited

The Directors of your Company present the 63rd Annual Report on the affairs of the Company together with audited statement of account of the Company for the year ended on 31st March, 2012. The highlights of financial Results for the year are given below:

(Rs. in Lakhs)

2011-12 2010-11

Gross Income from operations 82,940 76,845

Other Income 728 501

Profit before Interest,Depreciation, 2,223 3,006 tax and Exceptional Items

Interest and financing charges 4,116 4,702

Depreciation and amortization 4,695 4,056

Expense

Exceptional Items

- Profit on Sale of building - 11762

- Loss on Sale of Shares of a 61 - Subsidiary Company 61

- Profit/(Loss) from Discontinuing (143) 7 Operations

Provision for Tax

- Current Year - 419

- Earlier Year 14 (6)

Net Profit/(Loss) (6,805) 5,604



Dividend

In view of losses, the Directors are unable to recommend any dividend.

Operations Textile Units

The expansion and modernization project of the company's manufacturing facilities which were undertaken in 2006-08 could not be fully utilized as the completion of the expansion coincided with global meltdown & recessionary market conditions. Demand for direct export and from garment manufacturers remained subdued during the period due to downward trend in the domestic as well as international markets.

High Cotton Prices, during the last procurement season of cotton the prices which went as high as Rs 62500 per candy from Rs 35000 per candy due to pre-mature announcement of cotton exports and other factors. The prices suddenly crashed to a level of Rs 32000 per candy. The fluctuation of cotton prices led to high cost cotton getting stuck with the mills and losses on account of rupee devaluation hit by the company. It affected even the entire industry. Against the huge increase in the prices of cotton, and other inputs the selling prices increased marginally during this period, thus leading to strain on the overall margins.

- The company is having 19.5 MW in house rice-husk based power plants. The rates of rice husk have been abnormally high this year.

- The company incurred operational cash losses during the financial year 2008-09 to 2011-12 and continued to service interest and repayment of debts to the lenders despite losses which resulted in further erosion of working capital and lower capacity utilization.

In Sriganganagar unit, the operations were discontinued in earlier years. The sale of Land is pending due to mutation and is under disposal. The company is taking steps to get the mutation formalities completed.

Financial problems:

In light of the scenario, as explained above, owing to marketing difficulties, the profitability of the Textile operations took a sharp dip during the said period. Cotton prices went up by almost 40%. The Government of India on realizing the liquidity crunch being faced by Textile Sector had given two years moratorium on the loans taken by companies under TUF scheme. However, the interest on these loans had to be serviced. Consequently in this situation the earnings which had gone negative on account of low capacity utilization, the company ended up paying interest to the Banks out of working capital. This situation led to the erosion of working capital.

Now that the fabric demand has again picked up, most Textile Companies of the country are running their Plants at full capacity. Inspite of the order-book being comfortable, full capacity utilization your Company continues to be elusive on account of working capital constraints.

Government policies:

In the year 2010-11 the policy of Government of India for allowing and thereafter banning export of cotton resulted textile industry incurring huge losses. Steps initiated by the company:

- The company has since expanded its customer base and has gone deeper with the existing customers to fully secure its production capacities. The company in these years, focused, especially on work-wear and sportswear segments.

- The company has been very guarded in covering cotton in the current season. We are now not only keeping track of cotton future in India but also in New York Exchange.

- The company has taken several power saving initiatives, which will cover a part of husk price hike.

Filament Unit

JCT continues to maintain its position as one of the largest Textile Grade Nylon yarn manufacturer in India with installed capacity of 14,000 TPA. During the year the company sold -11211 MT of filament yarn & 696 MT of nylon chips as compared to 11,496 MT of filament yarn and 741 MT of nylon chips during the previous year. The continuous upward trend in prices of Caprolactum has been a major concern for the company. The Caprolactum prices increased from average of Rs 104.49 kg in FY 2010 to Rs 139.67 kg in FY 2011 an increase of 34% against it the average realisation increase of only 23% from Rs 217.29 kg to Rs 268.09 kg. The capacity of the market to absorb prices is limited as weavers start moving to other type of yarns.

The company has made a major shift in the product mix where the dependability on yarn sold in Surat market has been shifted to yarn being sold in Amritsar and Mau markets. The change is very significant as LOY base 20 Mono Yarn is less prone to market fluctuation and has a much higher margin.

Finance

During the year, the company redeemed Zero Rate Debentures (ZRDs) of Rs. 26.23 lakhs, Optionally Partially Convertible Preference Shares (OPCPS) of Rs. 22.49 lakhs and repaid term loan installments of Rs.2471.23 lakhs as per stipulated terms. In certain cases of loans, debentures and Optionally Partially Convertible Preference Shares (OPCPS) which became due for repayment/ redemption during the year, there were delays in servicing the debt obligations due to liquidity constraints.

Corporate Debt Restructuring

The company had filed its proposal for restructuring its debt through CDR Mechanism in January 2012, which was admitted by the Corporate Debt Restructuring Empowered Group (CDR EG) on 24th February 2012. Further, the company received a Letter of Approval bearing Number BY.CDR/(PMJ) No 685/2012- 13 dated 21st September 2012 from the CDR EG approving the Restructuring Package which, inter-alia includes Protection to Lenders for loss on NPV basis, Reduction in Rate of Interest, Reschedulement of Repayment of Term Loans, Carving out Working Capital Term Loan from Working Capital Limits, Sanction of Need Based Additional Working Capital, Issuance of equity shares to lenders for part of their sacrifices on NPV basis and provision of fresh funding by the promoters. The implementation of the scheme is under progress.

Foreign Currency Convertible Bonds (FCCBs)

The Company could not redeem the Foreign Currency Convertible Bonds (FCCBs) on due date 08.04.2011 for paucity of cash funds. The Company is taking steps to restructure/ extend the maturity of the FCCBs. The Company is in disccussions with the majority of Bondholders to restructure and their response is positive. For restructuring of FCCBs, shareholders' approval is also being sought at the forthcoming Annual General Meeting. In the meantime, the Bank of New York Mellon, the Trustee of such FCCB holders has filed a winding up petition against the Company before the Hon'ble High Court of Punjab & Haryana, Chandigarh, which is pending hearing/disposal. In the light of on going talks with some of the major Bondholders and the merit of the petition, the company does not anticipate any adverse outcome.

Net Worth Erosion

The accumulated losses of the company at the end of financial year 31st March, 2012 have resulted in erosion of more than fifty percent of its peak net worth during the immediately preceding four financial years. While the company is taking necessary steps to protect further erosion, the Company will report to the Board for Industrial and Financial Reconstruction about such erosion of net worth as envisaged under Section 23 of the Sick Industrial Companies (Special Provision) Act, 1985 forthwith upon finalization of the duly audited accounts of the Company for the financial year ended 31st March, 2012. Shareholders are also requested to take note of this erosion and consider the same at the Annual General Meeting of the members being convened on 30th November, 2012.

Fixed Deposits (FDs)

Deposits remaining unclaimed at maturity amounted to Rs. 8.08 lakhs as on 31st March, 2012. Of the above, deposits of Rs. 5.18 lakhs have been repaid subsequently. Repayments and servicing of interest on fixed deposits remained prompt and regular.

In view of substantial erosion in net worth, the company has stopped accepting fresh and renewals of deposits. SUBSIDIARY COMPANY

The Company has sold its shareholding in the only subsidiary company and incurred a loss of Rs 60.70 lakhs.

Statutory Disclosures

Pursuant to the approval granted by the Central Government under Section 212(8) of the Companies Act, 1956, copy of balance sheet, profit & loss account, cash flow statement, reports of the board of directors are annexed hereto and form an integral part of this report.

The particulars of employees as required under Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 are given in a separate Annexure to this Report. The Annexure is not being sent alongwith this Report to the Members of the Company in line with the provisions of Section 219(1)(b)(iv) of the said Act. These documents will be made available on request by any member of the Company. The statement containing the information relating to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules 1988 are annexed hereto and forms an integral part of the report.

Pursuant to Clause 49 of the Listing Agreement, report on Corporate Governance and Management Discussions and Analysis is annexed hereto and forms an integral part of this report.

Directors" Responsibility Statement

As required under Section 217 (2AA) of the Companies Act, 1956 this is to confirm that:

i) in the preparation of the annual accounts, the applicable accounting standards have been followed alongwith proper explanations relating to material departures, if any;

ii) such accounting policies have been selected and applied consistently and judgments/estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

iii) proper and sufficient care have been taken with best of knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the said Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the annual accounts have been prepared on a going concern basis.

Auditors

M/s S.P. Chopra & Company, Chartered Accountants, Auditors of the Company, retire and being eligible offer for re-appointment. The Audit Committee and the Board of Directors recommend the re-appointment of M/s S.P. Chopra & Company as the Auditors of the Company.

Auditors' Report

The report by the Auditors is self-explanatory. However, in respect of certain observations made by the Auditors in the Annexure to their main Report to the Members of the Company, directors have to submit that (a) delay in deosit of statutory dues in few cases were for very short period due to non-availability of funds timely;

(b) delay and default in repayment of term loan installments during the year were due to paucity of funds and the Company had also approached banks for restructuring of debt under CDR mechanism, the proposal of the company has been approved by the CDR Cell vide LOA dated 21st September, 2012 which is under implementation; (c) the company made a security deposit of Rs.11.50 Cr to an associate company due to non-fulfilment of a specific obligation stipulated in an agreement in 2008, the said security deposit has since been received back subsequently in 2012-13; and (d) the redemption of FCCBs was due on 8th April, 2011 for US$ 25.42 million alongwith redemption premium of US$ 5.08 million, the company could not make payment due to paucity of funds and approached bond holders for restructuring, the majority of bond holders have agreed and company is in discussion with the remaining bond holders. In the meantime, the trustees of the bondholders have filed winding up petition before Hon'ble High Court of Punjab & Haryana at Chandigarh, which is pending hearing / disposal. In the light of ongoing talks with the bondholders and the merit of the petition, the company does not anticipate any adverse outcome of the said litigation.

Cost Auditors

Pursuant to provisions of Section 233-B of the Companies Act, 1956, your Directors have appointed Mr. P.K. Verma AICWA, ACMM, as the Cost Auditors to conduct the Cost Audit of Textile Units at Phagwara and Sriganganagar and Filament Unit at Hoshiarpur, for the year ending on 31st March, 2012 and the requisite approval of Central Government have been received. Directors

In accordance with the provisions of the Companies act, 1956 and Articles of Association of the Company, Mr Apar Singh Dugal, retire by rotation and being eligible offer himself for re-election. Dr Ajit Kumar Doshi has joined the Board as Additional Director w.e.f 26th October, 2012 and holds office as Additional Director upto the date of the forthcoming Annual General Meeting of the Company. The Company has received notices from the members of the Company under Section 257 of the Companies Act, 1956 proposing his candidature for the office of Director.

Mr Mahesh Sahai and Dr Satya Pal Narang have resigned from the Board of the Company on 26.09.2011 and 13.10.2012 respectively. Your Directors wish to place on record appreciation for Mr Sahai and Dr Narang in respect of their gratitude and appreciation for assistance and guidance during their tenure as Directors of the Company.

Acknowledgement

Your Directors wish to place on record their appreciation for the team spirit, dedication, and commitment shown by the work force of the Company during this year. Their unstinted support has been and continues to be integral to your Company's operations. Your Directors acknowledges the valuable support of banks, customers, suppliers, business associates, shareholders for their continued co-operation and look forward to their continued support.



For and on behalf of the Board

New Delhi (SAMIRTHAPAR)

Date: 31st October, 2012 Chairman & Managing Director

 
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